Anil Agarwal plans to bring Anglo American’s business to India

In March, Anil Agarwal announced the planned purchase of about 13% of Anglo American’s stock in an investment by his holding company Volcan Investments Ltd, making him the second-largest shareholder in the $26 billion company. Photo: Pradeep Gaur/Mint

Vedanta Resources Plc.’s founder and group chairman Anil Agarwal plans to leverage his association with Anglo American Plc. to persuade the British miner to set up businesses ranging from fertilizer production to diamond mining in India.

Vedanta Resources also plans to spend $10 billion over the next three years across its businesses, of which $8 billion is earmarked for Indian operations, Agarwal said in an interview on the sidelines of the Global Natural Resources Conclave organized by Network18 and the Confederation of Indian Industry.

In March, Agarwal announced the planned purchase of about 13% of Anglo American’s stock in an investment by his holding company Volcan Investments Ltd, making him the second-largest shareholder in the $26 billion company that counts diamond producer De Beers among its assets.

“We are now looking at this work (the stake acquisition) that we have done as strategically being very important for India. We have focused on the fact that it (De Beers) is the largest global producer of diamonds and we (India) are the largest polisher of diamonds. We want all the diamonds to come to India. Secondly, India has enough diamond reserves. We will persuade them to produce diamonds in India,” said Agarwal.

“We are a large shareholder in the company and they are also a friend of ours. So, we will speak with them. They are into fertilizers. They are also the largest coal producers. They also produce copper and magnesium. They are also the largest producers of platinum in the world. So, all of that can be done here,” Agarwal added.

His plans come in the backdrop of the National Democratic Alliance government working on a new method of auctioning mining leases to match commodity price cycles and investor appetite.

Agarwal’s stake purchase in Anglo American came after the company last year spurned his offer to merge part of his mining business.

Agarwal didn’t rule out acquiring a controlling stake in the firm, one of the world’s top five mining groups alongside BHP Billiton Plc., Rio Tinto Plc., Vale SA and Glencore Plc. Its key assets include giant copper mines in Chile, iron ore operations in Brazil and South Africa and De Beers.

The company is bullish on its capital expenditure plans.

“We will invest $10 billion over the next three years. We will spend close to Rs60,000-70,000 crore, of which oil and gas will account for Rs15,000 crore. This will result in an increase in our capacity overall of 40-50%. Around 80% of these investments will be made in India,” Agarwal said.

Vedanta Resources has large debt obligations. According to data from S&P Global Ratings, Vedanta has bank loan maturities of $1 billion due in financial year 2018 and $500 million due in financial year 2019. That’s in addition to bond maturities of about $2 billion in financial year 2019. In January, Vedanta raised $1 billion by selling bonds to refinance its near-term debt obligations.

In response to a query about how he plans to fund the capital expenditure, Agarwal said: “We have our internal accruals. We have also registered very good profits this year. We will redeploy this profit…We are very confident that we will invest this money. This will help in job creation and increase employment.”